Identity Theft

With all the talk of Identity Theft due to the incidents at Target, Neiman Marcus, Michael’s and now Yahoo email accounts I thought it was time to start talking about the impacts of various levels of Identity Theft on the victims because not all Identity Theft is created equal. My focus on the levels of Identity Theft is on the impact to the individual victim rather than the impact to the companies, banks and credit card providers involved. With that focus I think there are three levels of Identity Theft shown below from least impactful to most impactful.

Credit Card Number Theft

Debit Card Number Theft

Full Identity Theft

It’s hard to find someone who hasn’t had to deal with Credit Card Number Theft if they have used a credit card for more than a few years. I have been a victim of Credit Card Number Theft on more than one occasion. I say more than one because I have received new cards replacing old ones with new numbers long before the card expiration date on more than one occasion. In those cases I actually never saw a fraudulent charge, but you know the card issuer isn’t going through the expense of issuing a bunch of new cards unless there was a reason. I have also had fraudulent charges show up on two different cards at different times. I know one of the card numbers was likely stolen by a Duke University student when I stayed at a hotel in Durham, N.C. because it was used to pay for iTunes purchases linked to a Duke University student email account. I have no idea how the other one was stolen as I had not used the card for several months prior to the fraudulent charge coming through.

I say credit card fraud is the least impactful to the individual victim of the crime because their liability is limited under the law and the fix is usually a quick reissuance of a new card. Unless you are in the middle of traveling and the impacted credit card is your only one, the individual victim is not very inconvenienced and it takes little of their time to handle the situation.

Debit Card Number Theft is more severe for two reasons. The first is that the legal protections are not as great (although many banks voluntarily provide similar protection to those required of credit cards) and the second is that, unlike credit card number theft, the individual victim has their personal money stolen (at least for a time until the bank restores it). This can lead to other impacts like bounced checks due to missing funds which will lead to even more time being spent by the individual victim to get resolved. But at least in this case, the Individual victim can usually have all of the issues fully resolved in a month or two and there are no ongoing consequences.

The final level of Identity theft is what I refer to as actual Identity Theft or full Identity Theft. This is when an individual has all of their personal information stolen and someone can pretend to be them to obtain loans, credit cards, tax refunds, leases of property and commit other illegal acts. Someone who is a victim of full Identity Theft can be incorrectly arrested for crimes they did not commit, can be denied the ability to buy a house and so on. The repercussions of such a theft can last for years and can take up an enormous amount of time to resolve and quite frankly, the life of the victim may never be the same again.

Fortunately, I have not yet been a victim of the latter two levels of identity theft. I do my part to limit my vulnerability by not using a debit card on-line or at retailers. I only use it at the bank ATMs. The banks may not like that, but I feel credit cards are eminently safer to use (with my regards to Dave Ramsey) in such situations. I also check my credit reports periodically. Because we all get a free credit report annually, I check one of the three major bureaus every four months. I also decided to buy some Identity Theft Insurance that includes monitoring my credit reports on a real time basis. I don’t know how well it works because I have not had my identity stolen, but I at least feel like I am trying to do something because when it comes to any level of Identity Theft I believe in the saying that it is not a matter or “if” but only a matter of “when.”